How do we divide BC Family property after separation?
BC Family Property Valuation Date Lawyers deal with division and valuation of BC family property, exempt property and the gain on exempt property. BC Family Property Valuation Date Lawyers explain that the date of separation is the event that entitles a spouse to their share in family property BUT it is the date of agreement or trial of the family property dispute, that is used as the valuation of that interest in the family property. Until recently house prices were rising dramatically but now the market is declining sharply. Depending on which side you are on you may like the separation date value or the current value. Jaszczewska v. Kostanski, 2016 BCCA 286 at para. 39 makes it clear that the presumptive right to equal division applies to post-separation increases regardless of contribution.
BC Family Property Valuation Date Lawyers – Call 1 877 602 9900
The recent decision of Kumagai v. Campbell Estate provides a nice snapshot of the law for BC Family Property Valuation Date Lawyers and their family law clients. It also helps answer the burning question separating spouses have: How do we divide BC Family property after separation? In this case, The BC Court of Appeal made it clear that BC Family property must be valued as of the date of the trial unless there is a finding of significant unfairness under s. 95 of the FLA. Market increases or decreases are unlikely to meet this test so if stocks go up or down or your house goes up or down because of market conditions do not expect to get more than half in most cases.
However, post-separation contributions and efforts can result in a different date of valuation being used here are some examples:
- Namdarpour v. Vahman, 2017 BCSC 1189, where the spouses owned a company that operated ferry terminal kiosks. The company was valued on a capitalised cash flow basis, which increased after separation. The court valued the shares based on the mid-point of two valuation dates (one shortly after separation, the other one year after the first valuation date) in order to account for the respondent’s effort in increasing the business after separation, the claimant’s efforts in developing the business, and the possibility that some of the increased sales might be the result of increased passenger traffic.
- Coltman v. Williams, 2018 BCSC 595 (Chambers), where the court valued the family property at a date earlier than trial but after separation on the basis that the relative brevity of the relationship necessitated an unequal division, despite the hard work the claimant put into the property (at para. 21).
- Phillips v. Saunders, 2018 BCSC 960, where the court valued a doctor’s professional corporation as of the date of separation in, given that the value of the professional corporation, in this case, depended solely on the husband’s earnings derived from his professional labour (at paras. 67 to 71). The court also held that the post-separation income was not “derived” from family property as defined in s. 84(1)(a) of the Family Law Act; it was “derived” from the professional services of the husband.
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How do we divide BC Family property after separation? Hire BC Family Property Valuation Date Lawyers
Lorne.. N. MacLean, QC founder of our award-winning team of BC Family Property Valuation Date Lawyers has teased out the key parts of the judgment to help you understand how the valuation date works with respect to changes in value after separation and what the test is for an unequal division of family property.
[73] Section 84 establishes the date of separation as the event when property is determined to be family property or excluded property. This is comparable to the defined “triggering event” under the former FRA. The purpose of s. 84 is to set out the date upon which the property is characterized as family property, not the date upon which it is valued, which is expressly addressed in s. 87. See F.(V.J.) v. W. (S.K.), 2016 BCCA 186 at para. 69.
[74] Section 87 of the FLA requires that (a) family property must be valued based on its fair market value, and (b) the value of family property and family debt must be determined as of the date of (i) an agreement dividing the net family property, or (ii) the date of a hearing with respect to the division of family property and family debt.
[75] The date of the hearing for the valuation of net family property is the presumptive valuation date. Where family property is the increase in value of excluded property (being property acquired by a spouse before the relationship between the parties began), the value of that property is determined presumptively at the date of an agreement between the parties or the date of hearing.
Unequal Division If Different Valuation Date Used
BC Family Property Valuation Date Lawyers know the test to get more than half of family property is now a high bar to meet. In Kumagai the BC Court of Appeal felt the judge made a mistake at trial and stated:
[76] A departure from the presumptive date for valuation of family property is effectively a reapportionment or unequal division of the family property, which can only be done under s. 95 of the FLA. Section 95 expressly provides for the reapportionment of net family property if an equal division would be “significantly unfair.” Under the former FRA, a change in the valuation date from the date of hearing was determined to be an effective reapportionment of the family assets. See Martelli v. Martelli (1981), 33 B.C.L.R. 145 at para. 28 (C.A.); Toth v. Toth (1995), 13 B.C.L.R. (3d) 1 at para. 55 (C.A.); McPhee v. McPhee (1996), 22 R.F.L. (4th) 302 at paras. 10–13 (B.C.C.A.); and Fisher v. Fisher, 2009 BCCA 567 at para. 61. The same reasoning, in my opinion, should be applied to the comparable provisions of the FLA. Any departure from the presumptive equal division of net family property under s. 81 of the FLA must therefore be made pursuant to s. 95(1) of the FLA, which imposes a threshold finding that an equal division of the net family property would be “significantly unfair” before any reapportionment of the net family property can be ordered.
[77] In this case, the judge’s reasons demonstrate an intention to grant Ms. Kumagai an equal division of the net family property based on his reference to the comments in Jaszczewska that (1) “mere disparity in wealth at the commencement of a relationship would [not] generally justify unequal division of family property at the end of the relationship” (at para. 150); and (2) “[e]xceptions to equal division of family property are not the norm” and “[s]ignificant unfairness must be demonstrated” (at para. 151), relying on the following comments of Mr. Justice Brown in L.G. v. R.G., 2013 BCSC 983 at para. 71, which state:
In my view, the term ‘significantly unfair’ in s. 95(1) of the FLA essentially is a caution against a departure from the default of equal division in an attempt to achieve ‘perfect fairness’. Only when an equal division brings consequences sufficiently weighty to render an equal division unjust or unreasonable should a judge[’s] order depart from the default equal division.
The judge concluded that “it would not be significantly unfair for the claimant to receive a compensation order equal to one-half of the family property less one-half of the family debt” (at para. 156).
[78] However, the judge chose the date of separation as the valuation date for the net family property because “[t]he claimant did not participate in or make any meaningful contribution towards any of the businesses being operated on the Campbell Lands, nor did she do anything to enhance their value other than assist Mr. Campbell in the upkeep and maintenance of the matrimonial home” and therefore “[i]t would be unfair to allow the claimant to participate in any increase in the value of the Campbell Lands after she separated from the relationship” (at para. 120).
BC Family Property Valuation Date Lawyers Explain Contribution Is Not Required – Call 1 877 602 9900
In a shift away from conduct and in an attempt to cut down on lengthy evidence of who did what tasks and whose tasks were more valuable during the relationship the new act does not focus on contribution as much as past legislation in BC:
[81] There are two further errors in the judge’s reasoning: (1) under s. 81(a) of the FLA, entitlement to an equal share in the net family property is not dependent on use or contribution to the family property; and (2) use or contribution to family property is not a requirement for making an order for an unequal division under s. 95, which only requires a finding of significant unfairness.
[84] In my respectful view, the judge’s decision in this case to value the property as of the date of separation is an error. His decision was based on his finding that it would be “unfair” for Ms. Kumagai to share in the increase in the market value of the Campbell Lands after separation because she did not contribute to that increase. “Unfair” does not rise to the standard of “significantly unfair” under s. 95, and, more significantly, contribution is not a requirement for an equal division of family property under s. 81 of the FLA. Furthermore, as discussed above, by valuing the family property as of the date of separation, the judge effectively granted Ms. Kumagai an unequal division of the net family property in favour of the Estate, contrary to the judge’s expressed intention to divide the net family property equally.
How do we divide BC Family property after a separation? If you have a stressful BC family property valuation and division case and need advice from senior and experienced BC family lawyers, call us toll free at 1 877 602 9900
